Brussels, 12/06/2015 (Agence Europe) - In Bratislava on Thursday 11 June, the national experts who prepare for Eurogroup meetings, the Euro Working Group, admitted that perhaps it was time to consider use of a plan B if agreement is not reached between Greece and its institutional lenders on a list of reforms to be introduced for the disbursement of the remaining aid under the bailout programme in order to prevent the country defaulting on its debt.
The nature of this plan B was reportedly not discussed at all, but it is known that all sides are working with the aim of keeping Greece in the eurozone. The question of capital controls at borders no longer seems feasible, however. The Greek representative at the Euro Working Group said the meeting had not been particularly pleasant because the tone of the talks had hardened somewhat.
The European Commission said on Friday that the IMF had certainly not walked out. The IMF announced on Thursday that its teams were returning to the United States (see EUROPE 11333). The president of the Commission, Jean-Claude Juncker, said he didn't think the IMF's move could be interpreted as withdrawing from the negotiations. Juncker is bound to talk with the IMF director general, Christine Lagarde, who will be attending the next Eurogroup meeting in Luxembourg on Thursday 18 June. IMF spokesperson Gerry Rice said that the IMF never left negotiating tables.
The chancellor of Germany, Angela Merkel, urged the parties on Friday to “keep talking.”
Ball is in the Greek court. Greece's lenders feel that Athens must make a political gesture. Either it should make an acceptable counter-proposal or it should accept the proposal on the table. The Commission has denied talk of a meeting being held in Athens on Saturday between the lenders and the Greek authorities.
Greek newspaper Kathimerini says the eurozone nations gave Greece twenty-four hours on Thursday - in other words until Friday evening - to return with counter-proposals that the head of Eurogroup, Jeroen Dijsselbloem, said had to be “serious.”
Jean-Claude Juncker said on French radio on Friday morning that the ball was in the Greek court. He mentioned the high prices for Greeks of electricity and medicines and that they had been told to replace them with equivalent measures.
Among the trickiest issues is reform of the pensions system that the IMF says is unsustainable, but which the European Commission seems to be more flexible about.
Agreement on reforms will not in itself be enough to release the remaining aid. Greece will first have to introduce legislation. A highly optimistic scenario that nobody seems to believe in would be for agreement to be reached at the weekend, including a list of prior actions, then Greece would introduce legislation ahead of the Eurogroup meeting on 18 June, then national parliaments could give their go-ahead and the money would be disbursed by 30 June, the day when Greece is due to pay around €1.6 billion to the IMF.
Greek minister Alekos Flambouraris hoped agreement could be reached by 18 June.
An extension to the aid plan? It is virtually certain that Eurogroup will have to decide on an extension to the aid plan, failing which the funding earmarked by the eurozone for Greece would no longer be valid. Some media talk about a nine-month extension to the current bailout plan, but others say there isn't enough money left in the current bailout to last that long. If Greece applies its structural adjustment plan to the letter and the IMF is able to disburse all its remaining batches of aid, then one source says there should be enough money to last until March 2016.
Alongside what the IMF did not disburse in 2014 (€3.5 billion connected with the fifth monitoring mission and included in the €7.2 billion instalment that depends on agreement on a list of reforms), the timeline of disbursements for Greece foreseen is €8.6 bn from the IMF in 2015 and €3.1 bn in 2016. The EFSF still has €10.9 billion earmarked for Greek banks, which could be used for other purposes, subject to unanimous agreement at Eurogroup.
Some eurozone nations have tried to dampen Greek enthusiasm on the debt question. On Belgian radio on Friday, Belgian finance minister Johan Van Overtveldt said that the repayment plan for Greek debt would take decades, Belgium would gradually lose out over the years and this would certainly be at the cost of the Belgian taxpayer. The Slovakian prime minister, Robert Fico, however, said that if a debt writedown had no consequences for his country's budget, then he was prepared to be cooperative. (Elodie Lamer)